How Much Debt Do I Need to Have to File for Chapter 7 Bankruptcy?
A fairly common question that we receive as expert attorney come down to when our clients should be filing for chapter 7 bankruptcy and how much debt they need to have to consider it to be a good option. There is no minimum amount of debt that you should have in order to file for bankruptcy relief. The amount of debt you carry is an important factor to consider but some of the most important factors to consider come down to whether or not bankruptcy would be a good option for you. A bankruptcy filing may be in your best interest if you cannot afford to pay back your debts or if you’re unable to reach a resolution with your creditors outside of bankruptcy for debt forgiveness.
You might be surprised to know that your creditors are willing to restructure your debt or find a way that you could pay back only a portion of your debt as an option aside from bankruptcy. Most creditors are willing to negotiate with you before you resort to bankruptcy because they will likely be able to receive a larger portion of the debt working with you.
Bankruptcy under Chapter 7 may also not be that and then tedious depending on the type of debt that you have or the circumstances that you’re in. Working with a bankruptcy attorney to determine more about your circumstances and if you can afford to pay back your debts can be a great option before you consider the idea of a full-blown bankruptcy.
Bankruptcy is one of the best ways that you could forgive a large amount of the debt that you might be facing. A chapter 7 bankruptcy plan will involve you selling off a variety of your assets in order to pay down your debts. In order to qualify for debt relief efforts under Chapter 7 bankruptcy, you’ll need to qualify for a means test. A chapter 7 bankruptcy means test involves a person demonstrating in income in which they will be unable to repay their debts even with a repayment plan under Chapter 13. Any debtor under Chapter 7 will also need to receive credit counseling from approved credit counseling agencies. You may also be restricted from filing for bankruptcy if you completed a bankruptcy petition hundred and eighty days prior to your filing date.
To complete the means test you will have to demonstrate a schedule of your current income and expenditures as well as your assets and liabilities. A full statement of your financial affairs and your debts will be examined by a bankruptcy trustee that will determine whether or not you would be able to repay it even with a repayment plan. There is a filing fee that’s required under Chapter 7 bankruptcy. Keep in mind that under Chapter 7 bankruptcy you may be unable to hold onto various assets such as extra property, luxury vehicles, valuable jewelry, and more. Almost every asset will need to be accounted for and potentially sold from a bankruptcy trustee in order to manage the debts that you owe.
The basic answer to the question of how much debt that you need to qualify for Chapter 7 bankruptcy is that any amount of debt could potentially qualify for this form of bankruptcy. If you’re having difficulty repaying your debts and you have a significantly reduced income, chapter 7 bankruptcy might be a solution that could help to get you free of debt to rebuild your financial future.
Contact us today if you are interested in learning more about bankruptcy and if it would be an advantageous solution to your financial crisis.